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Lockheed (LMT) Rewards Shareholders With a 5% Dividend Hike
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Lockheed Martin Corp. (LMT - Free Report) recently announced that its board of directors has approved a hike in its quarterly dividend to $3.15 per share, reflecting an increase of 5% from the prior payout. This signifies the company’s 21st consecutive year of raising its dividends.
With the current hike, LMT will now pay out an annual dividend of $12.60 per share. This represents an annual dividend yield of 3.14%, based on its share price worth $400.73 as of Oct 6, 2023. LMT’s current annualized dividend yield is more than the Zacks S&P 500 composite’s yield of 1.48%.
Along with the dividend hike, its board has also approved an expansion of its share repurchase program, allowing for the buyback of up to an additional $6 billion worth of common stock. This move nearly doubles the total authorization for the current program to $13 billion for future purchases.
This signifies Lockheed’s strength in the business to generate enough profits to reward shareholders with increased dividend payouts and share buybacks.
Can Lockheed Sustain Dividend Hikes?
A company’s commitment to regularly distribute extra cash to shareholders either through dividends or share buyback activity depends on its financial strength and ability to generate enough cash. In this context, it is imperative to mention that Lockheed reported an improvement of 6.5% year over year in its bottom line in second-quarter 2023.
Backed by such advancement in earnings, the company ended second-quarter 2023 with cash and cash equivalents of $3.67 billion compared with $2.55 billion at the end of 2022.
Lockheed’s growth prospects also look promising backed by its involvement in combat-proven programs like F-35 lightening II, C-130J, Black Hawk, CH-53K, THAAD and a few more. This results in a steady inflow of orders and a solid backlog. Notably, its backlog as of Jun 25, 2023, was $158.01 billion compared with $145.09 billion at the end of first-quarter 2023. Such robust backlog count further bolsters LMT’s revenue generation prospects.
Another factor supporting robust revenue generation and consequently elevated dividend disbursements is improved budgetary provision. Notably the U.S. fiscal 2024 defense budget offers funding for 83 F-35 aircraft with supplemental funding to support munitions investment.
On the back of such solid budgetary provision and backlog strength, the company recently raised its earnings expectation for 2023. Management now expects earnings per share in the range of $27.00-$27.20, up from the prior guidance of $26.60-$26.90. Lockheed also expects to generate free cash flow of $6.2 billion during 2023.
Such factors reinforce the confidence on LMT’s financial strength and thus we may expect it to continue providing impressive hikes in its dividend payment to shareholders, like the latest one.
Peer Moves
LMT apart other defense companies that have rewarded shareholders with impressive dividend payments in recent times are:
Northrop Grumman (NOC - Free Report) : It enhanced its quarterly dividend by 8% in May 2023 to $1.87 per share, marking its 20th consecutive annual rise.
Northrop has a long-term earnings growth rate of 3.7%. The Zacks Consensus Estimate for NOC’s 2023 sales suggests growth rate of 5.8% from the prior-year reported figure.
RTX Corporation (RTX - Free Report) : Its board of directors declared a dividend of 59 cents per outstanding share of RTX common stock in April 2023, which indicates a 7.3% boost over the prior quarter's dividend amount.
RTX’s long-term earnings growth rate is pegged at 9.4%. The Zacks Consensus Estimate for RTX’s 2023 calls for 9.9% improvement from the prior-year reported number.
Curtiss-Wright Corporation (CW - Free Report) : Its board of directors approved a 5% hike in its quarterly dividend to 20 cents per share in May 2023.
The Zacks Consensus Estimate for CW’s 2023 sales implies growth rate of 8.3% from the prior-year reported level. The Zacks Consensus Estimate for CW’s 2023 earnings suggests growth rate of 11.7% from the prior-year reported figure.
Price Movement
In the past year, shares of Lockheed have decreased 2.3% compared with the industry’s 6.9% decline.
Image: Bigstock
Lockheed (LMT) Rewards Shareholders With a 5% Dividend Hike
Lockheed Martin Corp. (LMT - Free Report) recently announced that its board of directors has approved a hike in its quarterly dividend to $3.15 per share, reflecting an increase of 5% from the prior payout. This signifies the company’s 21st consecutive year of raising its dividends.
With the current hike, LMT will now pay out an annual dividend of $12.60 per share. This represents an annual dividend yield of 3.14%, based on its share price worth $400.73 as of Oct 6, 2023. LMT’s current annualized dividend yield is more than the Zacks S&P 500 composite’s yield of 1.48%.
Along with the dividend hike, its board has also approved an expansion of its share repurchase program, allowing for the buyback of up to an additional $6 billion worth of common stock. This move nearly doubles the total authorization for the current program to $13 billion for future purchases.
This signifies Lockheed’s strength in the business to generate enough profits to reward shareholders with increased dividend payouts and share buybacks.
Can Lockheed Sustain Dividend Hikes?
A company’s commitment to regularly distribute extra cash to shareholders either through dividends or share buyback activity depends on its financial strength and ability to generate enough cash. In this context, it is imperative to mention that Lockheed reported an improvement of 6.5% year over year in its bottom line in second-quarter 2023.
Backed by such advancement in earnings, the company ended second-quarter 2023 with cash and cash equivalents of $3.67 billion compared with $2.55 billion at the end of 2022.
Lockheed’s growth prospects also look promising backed by its involvement in combat-proven programs like F-35 lightening II, C-130J, Black Hawk, CH-53K, THAAD and a few more. This results in a steady inflow of orders and a solid backlog. Notably, its backlog as of Jun 25, 2023, was $158.01 billion compared with $145.09 billion at the end of first-quarter 2023. Such robust backlog count further bolsters LMT’s revenue generation prospects.
Another factor supporting robust revenue generation and consequently elevated dividend disbursements is improved budgetary provision. Notably the U.S. fiscal 2024 defense budget offers funding for 83 F-35 aircraft with supplemental funding to support munitions investment.
On the back of such solid budgetary provision and backlog strength, the company recently raised its earnings expectation for 2023. Management now expects earnings per share in the range of $27.00-$27.20, up from the prior guidance of $26.60-$26.90. Lockheed also expects to generate free cash flow of $6.2 billion during 2023.
Such factors reinforce the confidence on LMT’s financial strength and thus we may expect it to continue providing impressive hikes in its dividend payment to shareholders, like the latest one.
Peer Moves
LMT apart other defense companies that have rewarded shareholders with impressive dividend payments in recent times are:
Northrop Grumman (NOC - Free Report) : It enhanced its quarterly dividend by 8% in May 2023 to $1.87 per share, marking its 20th consecutive annual rise.
Northrop has a long-term earnings growth rate of 3.7%. The Zacks Consensus Estimate for NOC’s 2023 sales suggests growth rate of 5.8% from the prior-year reported figure.
RTX Corporation (RTX - Free Report) : Its board of directors declared a dividend of 59 cents per outstanding share of RTX common stock in April 2023, which indicates a 7.3% boost over the prior quarter's dividend amount.
RTX’s long-term earnings growth rate is pegged at 9.4%. The Zacks Consensus Estimate for RTX’s 2023 calls for 9.9% improvement from the prior-year reported number.
Curtiss-Wright Corporation (CW - Free Report) : Its board of directors approved a 5% hike in its quarterly dividend to 20 cents per share in May 2023.
The Zacks Consensus Estimate for CW’s 2023 sales implies growth rate of 8.3% from the prior-year reported level. The Zacks Consensus Estimate for CW’s 2023 earnings suggests growth rate of 11.7% from the prior-year reported figure.
Price Movement
In the past year, shares of Lockheed have decreased 2.3% compared with the industry’s 6.9% decline.
Image Source: Zacks Investment Research
Zacks Rank
Lockheed currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.